Monday, May 11, 2015

It's been mere
months since Congress repealed the FCC's costly and innovation-inhibiting
integration ban on video device designs. But the Commission already appears to
be pushing for new controls on video devices.

The FCC has
charged the new technical advisory committee on downloadable security to
include methods for unbundling video programming content and menu displays. That
strays from Congress's mandate for a report on downloadable security for
next-generation devices. The Commission has created new obstacles to consensus
and completion of the required report. Its charge to the committee, if
implemented, would enable third-parties to repackage and rebrand video
programming and menus, thereby infringing on the editorial rights of video
service providers.

The FCC should
respect the limited role Congress gave it. Its assistance to the committee should
not include influencing the report to reflect broader regulatory ambitions. The
Commission should let the committee focus its report on downloadable security.

The STELA
Reauthorization Act of 2014 (STELAR) repealed the FCC's misguided "integration
ban" on video devices. The integration ban prohibited multi-channel video programming
distributors (MVPDs) providers from including security functions and navigation
functions in the same video device. In other words, no cable or DBS set-top box
could, by itself, both surf video channels or menus and de-crypt secured video
transmissions for viewing. The FCC even forbade video navigation devices from
directly downloading security functions.

Section 629 of
the Communications Act only requires the Commission to "assure the
commercial availability, to consumers" of MVPD services of video devices
"from manufacturers, retailers, and other vendors not affiliated with any
multichannel video programming distributor." The integration ban was an
anti-innovation obstacle of the FCC's own making.

[T]he Chairman of the Commission shall establish a working group
of technical experts representing a wide range of stakeholders, to identify,
report, and recommend performance objectives, technical capabilities, and
technical standards of a not unduly burdensome, uniform, and technology- and
platform-neutral software-based downloadable security system designed to
promote the competitive availability of navigation devices in furtherance of
section 629 of the Communications Act of 1934…

Unfortunately, in
its setup of DSTAC the FCC needlessly overcomplicated an already complex
undertaking. The Commission staff's preliminary
instructions stated the "committee shall develop" a method to
disaggregate its bundled content and menu products into outputs through a "black
box" for third-parties to repackage "even if participants believe
that those features should not be mandatory."

Requiring DSTAC
to develop methods for disaggregating bundled video programming and menu
contents are outside the scope of STELAR's mandate. Congress directed the FCC's
Chairman to establish a working group focused on a "downloadable security system."

By
directly including disaggregated video
programming and menu content outputs in its charge to DSTAC, the FCC has created an unnecessary hurdle. Getting different
and competing industries, companies, and other stakeholders to reach consensus
on technical specs is hard enough. But including extraneous matters over which DSTAC members are strongly at odds compounds the
difficulties. Not surprisingly, members of DSTAC as well as observers have
voiced objections to the Commission needlessly bringing in technical and regulatory
side issues.

Unfortunately, the
FCC staff's instructions are reminiscent of its misguided 2010 AllVid plan – a
comprehensive set of proposed new controls on how all MVPDs design and operate
the video navigation devices they make available to subscribers. The AllVid
proposal would have mandated that all MVPDs make available to subscribers a
special "adapter" or a "gateway" device for allowing all
consumer electronic devices throughout a subscriber's home network to access
MVPD services. AllVid also would have required disaggregation or unbundling of
MVPD video programming and related content for rebranding and repackaging to
consumers by unaffiliated providers.

Aspects of FCC's
instructions to DSTAC that bear similarity to AllVid repeat some of AllVid's basic
mistakes. Government controls on how video devices are designed or operate undermine
basic freedom to design and market products and services for consumers. AllVid
would have hampered
MVPDs' future ability to innovate and compete with unregulated
manufacturers of mobile devices, tablets, video game consoles, and other video
viewing devices. And by pushing a DSTAC toward a "black box" for
third-parties to repackage content and menu products, the Commission again
appears to urge a restrictive approach to innovation.

In
addition, AllVid posed a
serious First Amendment problem. Requiring disaggregation of MVPD video programming and
related content would have interfered with the editorial discretion of MVPDs in
their provision of a retail service. AllVid would have undermined an MVPD's
ability to select, control, and identify its own unique message under its own
branded service. The Commission staff's instructions that DSTAC develop a
method to disaggregate bundled content and menu products into outputs for
third-parties to reassemble and rebrand presents similar First Amendment problems.
Such an approach would undermine protected speech selection and presentation
choices of video programming and displays by MVPDs.

In
a set of follow-up
instructions issued on April 27, the FCC staff
appeared to partly walk things back. It called on DSTAC to make video
and menu content disaggregation an alternative
approach to be included in its report. But the revised charge to DSTAC is still
outside the scope of what Congress called on the FCC Chairman to do. And the
underlying anti-innovation and First Amendment problems posed by requiring
MVPDs to surrender editorial control over video programming content and menu
displays remain.

The
FCC should completely remove video
and menu content disaggregation methods from its charge to DSTAC. The
Commission should instead focus the group on downloadable security. Keeping
DSTAC's charge narrowly confined to the terms of STELAR offers the best chance
for achieving consensus in its report to Congress.

In any event, the process and work of
DSTAC warrant only modest expectations going forward. The FCC should do its
best to follow Congress's mandate. But Congress assigned a difficult task. Downloadable
security for video services is a multi-faceted and complex topic. And the FCC
has a sorry history regarding regulation of video devices. Aside from the
integration ban and AllVid, one shouldn’t overlook CableCARD – a $1 billion
set-top box regulatory regime that few consumers adopted and which was later thrown
out by the D.C. Circuit. The unsuccessful CableCARD experience suggests the
practical limits to government controls over how video devices are designed and
operate.

DSTAC's assembly
of a report that will satisfy all stakeholders is unlikely given the technical
and other issues surrounding video services and devices. But the FCC should stick
to the law and avoid any future actions that risk making an unavoidably
complicated task utterly impossible.